FX Focus: Pound on track for biggest daily gain in eight years after May commits to 'hard Brexit'

Theresa May: Brexit the end of Britain making vast contributions to EUITN

The pound was on track for its best daily gain in over eight years on Tuesday (17 January), as Theresa May set out her strategy for Brexit negotiations, confirming Britain will leave the European Union and the single market.

Having fallen to a three-month low of $1.1983 early on Monday, sterling was relatively flat at around $1.2165 when May began speaking, before rising 2.4% to $1.2340 and €1.1442 as she outlined her plans.

The gain against the dollar, put the pound on track for its biggest daily advance since October 2008.

"This agreement should allow for the freest possible trade in goods and services between Britain and the EU's member states," May said.

"It should give British companies the maximum freedom to trade with and operate within European markets – and let European businesses do the same in Britain. But I want to be clear. What I am proposing cannot mean membership of the single market."

Shortly after the speech, the UK currency had pulled back slightly, but remained 1.44% and 0.40% higher against the dollar and the euro, fetching $1.2230 and €1.1435 respectively.

Kathleen Brooks, research director at City Index, said described the jump as a rare positive performance for the pound. "It is too early to know if the negative impact of politics on the UK currency is starting to wane," she said.

"However, if pound/dollar can continue this rally into the end of this week, and move back towards $1.25, then it could suggest that the UK currency is developing a natural resistance to Brexit."